News has emerged from Seoul that Korea First Bank (KFB), in which private equity fund Newbridge Holdings owns 50.9%, has requested proposals for its third cross-border MBS of 2004. According to bankers familiar with the RFP, 12 banks were asked to pitch for a $500 million transaction, with bids due in by the end of Sept. 14.
The banks are: Bank of America, Calyon, Citigroup Global Markets, Credit Suisse First Boston (CSFB), Deutsche Bank, ING, JPMorgan, Lehman Brothers, Merrill Lynch, Societe Generale, Standard Chartered and UBS.
Should Calyon gain the prize, the bank's top brass may pat themselves on the back for hiring Greg Park to head ex-Japan Asia securitization, given his prior experience in Korea. It could also signal more to come from this arranger. Conversely, the inclusion of Park's former employer, CSFB, has surprised a few bankers, since the bank has not replaced him since he left in June (see ASR 6/14).
So far, there has been no indication on when KFB will select an outright winner or draw up a short list for further consideration. Given the number of banks bidding, it seems probable KFB wants to do a public 144A. If that is the case, a monoline insurer will likely be brought on board to widen the issue's appeal to international investors.
A public transaction would follow the path of KFB's debut cross-border deal completed in April (see ASR 4/5). UBS arranged the $499.6 million deal, with Lehman as co-lead, which was structured with an Ambac wrap to ensure triple-A ratings at an all-in-cost of 45 basis points.
KFB followed up in August with a $325 million private transaction. Merrill structured the deal - rated AA-/Aa3 by Fitch Ratings and Moody's Investor's Service, respectively - and is widely believed to have also been the sole investor.
Elsewhere in Korea, speculation that consumer finance company Hyundai Capital was also preparing to send out RFPs this month seems unfounded. On hearing the rumor, several bankers contacted Hyundai directly; only to be told the company has no further securitization plans for 2004. Hyundai tapped the market in June with a $300 million auto-loan deal arranged by Standard Chartered (see ASR, 6/21).
Meanwhile, HSBC's omission from the KFB bidding may be puzzling given its successes in 2004, but there can be no doubting its dominance of the Hong Kong market. Last week, Hong Kong Mortgage Corporation (HKMC), the government-owned secondary mortgage company, awarded HSBC the mandate for a HK$2 billion ($256.5 million) MBS.
HSBC also handled HKMC's last securitization in November 2003, a HK$3 billion deal issued out of the Bauhinia SPV, established in 2001 by Merrill. A well-placed source told ASR the next deal would be launched in October, and will feature retail as well as institutional tranches.
That is no shock given the strong retail demand for the government's HK$6 billion tunnel receivables deal in May (see ASR, 5/10), arranged by HSBC and Citigroup.
The source also indicated the long-awaited real estate investment trust (REIT) from the Hong Kong Housing Authority (HKHA) is expected to launch in the next two months. The HK$25 billion-plus ($3.2 billion) REIT, Hong Kong's first, will see the divestment of HKHA's retail and car parking assets.
Goldman Sachs, HSBC and UBS are the appointed managers of the sale. Meanwhile it was confirmed recently that Singapore property giant CapitaLand will be a strategic partner, investing $180 million in the REIT. CapitaLand has established three REITs of its own, as well as issuing several securitization deals, most recently in July (see ASR, 8/2).
Over in Japan, Bank of Tokyo Mitsubishi, Development Bank of Japan and UFJ Bank are joining forces on a securitization program where animated-cartoon copyrights will be used as collateral, a first for Japan.
The scheme will help start-up animation companies raise funds for new projects. Tokyo-based GDHKK is the first production company to take advantage, selling the rights to two cartoons to a special purpose company for 900 million ($8.2 million).
The three banks are actively seeking similar assets, with a view to packaging them into a future flow deal to be marketed to institutional investors in 2005. The banks are also looking at developing similar schemes for other intellectual property rights such as film, video games and music.
At present, such transactions must be issued out of SPCs rather than trust vehicles, more commonly used for Japan securitization. Under the current Trust Business Law, intellectual property rights cannot be sold to trusts. That could change however, as a bill seeking amendments to the Law will be considered by DIET, Japan's national legislature, later this year.
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